USOIL
Today, I discovered that USOIL’s price action did not play out as hoped, and so triggered my USO stop-loss:
As can clearly be seen on the USOIL chart, the price action of USOIL broke its bullish price structure on the 4 hour timeframe, and has now turned bearish.
Learning Points
- I knew that there was a good possibility that the price action of USOIL would decline, therefore, I choose to reduce my risk by making a 1/3 entry only. However, the price of USO declined sharply, gapping down. The result is that I made a larger 1/2 loss than planned for due to the slippage. As a result, in the future, I will always factor in the risk of slippage, especially when trading ETFs, and when assessing trades that are not moving according to plan.
- Even though I focus on the 4 hour timeframe, it is extremely important that I continue to first assess the price action direction of the relevant asset on the daily and weekly timeframe to ensure that I am trading in the most probable direction (high-probability trade).
- Remember that If the price action is ranging on the daily timeframe, then this will cause their to be a lower-probability of trading success on the 4 hour timeframe.
Next Action
- Update new trading spreadsheet with losing USO trade as soon as possible.
- Always factor in the risk of slippage, especially when trading ETFs.
- Seek to carry out high-probability trades only by ensuring that the daily and the 4 hour timeframe are in alignment.
